Download Segmentation

GO-TO-MARKET WORKSHOP
COMMONWEAL
VENTURES
Integrated Marketing & Customer Segmentation
Britain and America are two
nations separated by a
common language.
George Bernard Shaw
Customer Segmentation
Identify
Differentiation
Segment
Target Geography
Validate
Geographic
Market

Beachhead
Customer
Mapping Profitability – Fuelling Growth
Logic of the Marketing Plan:
Discovering Market Entry Model
Core Concepts in Marketing Plan










Industry Benchmarking
Market Research
Segmentation
Target Market Identification
Positioning & Beachhead Selection
Reference Customer Clustering Market Planning
Marketing
Market
Business Development
Execution
Sales
Go To Market
Logic of the Marketing Plan:
Discovering Market Entry Model
Designing the Market Attack:
Integrating the Components

Choosing targeting variables

Substantial variation in terms of the
chosen variable across segments.

Purchase pattern (e.g. purchase
intention, usage rate)

Needs or benefits

Little variation in terms of the chosen
variable within a segment.

Buying decisions triggered by
targeting variable, i.e. what is
important to the customer
Designing the Market Attack:
Integrating the Components
Target
Business
Development
Sales
Attack
Marketing
Designing the Market Attack:
Integrating the Components
 Market Planning:
▪ Industry Analysis
▪ Market Research
▪ Segmentation
▪ Target Market
▪ Beachhead
▪ Pricing Model
Target
 Market Execution:
Marketing
▪ Strategy
▪ Channels
▪ Collateral
▪ Measures/Metrics
▪ Promotion
▪ PR & Communication
▪ Budgeting 2 ROI
Designing the Market Attack:
Integrating the Components
 Benchmarking Industry
Structure and Value
Chain
Business
Development
 Identifying Go To Market
Partners
Suppliers
Channels
Alliances & JVs
Strategic Partners
 Consider “Incubation” for
Marketing and Financing
Designing the Market Attack:
Integrating the Components
Strategy
 Sales Approach and
Model




Lead Generation
Lead Cultivation
Channel Selection
Channel Acquisition
Execution
 Sales Team & Partners
 Budgeting
 Goal Setting & Milestones
 Sales Protocol
 Tactics
 Incenting Team & Partners
Sales
Attack
Designing the Market Attack:
Integrating the Components
Target
Business
Development
Sales
Attack
Marketing
Synchronize, Budget & Measure ROI on Customer Acquisition/Share Goals
Developing Sales Strategy:
Channel Selection
Market Segmentation
 Dividing
a market into distinct groups with distinct needs,
characteristics, or behavior who might require separate
products or marketing mixes.
Proportion of company using market segmentation
11%
10%
17%
11%
Legend:
Yes – using market
segmentation
No – not using
market segmentation
Overall
B2B industries
B2C
industries
B2B & B2C
industries
Customer Segmentation
Dividing a market into distinct groups with distinct needs,
characteristics, or behavior who might require separate products or
marketing mixes.
B2C Segmentation Variables
Geographic
Demographic
Psychographic
• World region • Age
• Lifestyle
or country
• Gender
• Opinions
• U.S. region • Family size
• Attitudes
• State
• Family life cycle• Values
• City
• Income
• Degree of
• Neighborhood• Occupation
Loyalty
• City or
• Interests
• Education
metro size
• Activities
• Religion
• Density
• Race
• Climate
• Generation
•
Nationality
Behavioral
• Occasions
• Benefits
• User Status
• Attitude To
Product
• User Rates
• Readiness Stage
• Usage Rate
B2B Segmentation Variables
Geographic
Firmographic
• World region • Industry
or country
Sector
• U.S. region • # Employees
• State
• Revenue
• City
• Market
• Neighborhood Position
• Regulatory
• City or
Issues
metro size
• Investors
• Density
• Ownership
Type
Role
• Executive
• Sales
• HR
• Finance
• Marketing
• Research
• “Director”
• “$$”
Behavioral
• Occasions
• Benefits
• User Status
• Attitude To
Product
• User Rates
• Readiness Stage
• Usage Rate
Segmentation: Strong Segmentation Scheme

Choosing targeting variables

Substantial variation in terms of the
chosen variable across segments.

Purchase pattern (e.g. purchase
intention, usage rate)

Needs or benefits

Little variation in terms of the chosen
variable within a segment.

Buying decisions triggered by
targeting variable, i.e. what is
important to the customer
Steps in market segmentation, targeting and
positioning

Market Segmentation
Identify basis for segmenting the market
 Develop segment profiles


Target Marketing
Develop measure of segment attractiveness
 Select target segments


Market Positioning
Develop positioning for target segments
 Develop a marketing mix for each segment

Target Marketing


Break a market into segments and concentrate
on one or a few key segments.
Prioritize your limited resources on
where the value proposition is most
compelling.
Segmentation Methods May Be Used in
Combination
2
3
Needs-based
segmentation
Segments based on
behaviors, needs and
drivers, indicating how they
think about the features of a
product/service, what they
prefer and for which reasons
Usage-based
segmentation
What the
customer needs
and wants
Segment based on past and
current customer’s usage of
channels and products
What, where
and how the
customer
purchases
1
Sociodemographic &
life style /
Firmographic
segmentation
Segments based on:
B2C: Age, gender, interest
and other aspects of their
lifestyles
B2B: Sector, number of
employees, turnover,
geographic location…
Who
is the
customer
4
How much value
the customer
delivers
Value-based
segmentation
Segment based on
current/potential
profitability-value and
describes what kind of
actions can be taken to
maximize customer
profitability by using
quantitative criteria
Segmentation Approaches

Geographic segmentation

Demographic/Firmographic segmentation

Psychographic/Role segmentation

Behavioral segmentation
Selecting the appropriate segmentation
method is a function of the business objectives
Segmentation Schema

Approaches to market segmentation:
 Geographic
segmentation
 Demographic
segmentation
 Psychographic
 Behavioral
segmentation
segmentation
Segmentation Variables
Geographic
Demographic
Psychographic
Behavioral
• World region • Age
• Lifestyle
• Occasions
or country
• Gender
• Opinions
• Benefits
• U.S. region • Family size
• Attitudes
• User Status
• State
• Family life cycle• Values
• Attitude To Product
• City
• Income
• Degree of loyalty• User Rates
• Neighborhood• Occupation • Interests
• Readiness Stage
• City or
• Education
• Activities
• Usage Rate
metro size
• Religion
• Density
• Race
• Climate
• Generation
• Nationality
Segmentation Approaches
DOMESTIC MARKETS:
 Demographic segmentation
• Industry, company size,
location
 Operating variables
• Technology, usage status,
customer capabilities
 Purchasing approaches
 Situational factors
• Urgency, specific
application, size of order
 Personal characteristics
• Buyer-seller similarity,
attitudes toward risk, loyalty
GLOBAL MARKETS:
 Geographic segmentation
 Location or region
 Economic factors
• Population income or level
of economic development
 Political and legal factors
• Type / stability of
government, monetary
regulations, amount of
bureaucracy, etc.
 Cultural factors
• Language, religion, values,
attitudes, customs,
behavioral patterns
Segmentation Schema

Dividing the total heterogeneous market for a
good or service into smaller, more
homogeneous groups.

Discern between groups using segmentation
variables.
Criteria for Segmentation
Segmentation Dimensions
Homogeneous
Within Segments
Heterogeneous
Among
Segments
Substantial
Operational
Profitable
Useful to ID
Customer
Profitable
Entrepreneurial Marketing
Why is Segmentation Important? Heterogeneity

Customers will prefer a product which approximates their
preferences.
Segment 1
Segment 2
Scatter plot of consumer preferences
This position will
attract all
customers from
both segments
in monopoly
Why is Segmentation Important?
Differentiated Second
Mover Occupies Profitable
Segment
Monopolistic
First Mover
in Unsegmented
Market
Segment 1
Segment 2
Scatter plot of consumer preferences
First Mover
Retreats to
Second-best
and Less
Profitable
Segment
Segmentation: Combining vs. Dividing
Combining
Dividing
Cons
Pros
Increase in target Difficult to develop
effective
market size
Pros
Easier to satisfy
each segment
very well
Economies of
scale
Easier to achieve
competitive
advantage
marketing mix
Competitors can
draw customers
away by offering
Less investment targeted
as result of more marketing mix to
homogeneous
general
sub-segments
marketing mix
Potentially less
competition
Potentially bigger
sales within
homogeneous
segment
Cons
Decrease in target
market size
Selecting a Target Market and
Establishing a Position in the Market
Analyzing Competitors
Types of Competitors New Ventures Face
Target Marketing


Break a market into segments and concentrate
on one or a few key segments.
Prioritize your limited resources on
where the value proposition is most
compelling.
Beachhead Customer
A position on an enemy shoreline captured by troops
in advance of an invading force.
A first achievement that opens the way for further
developments; a foothold . . .
Example Beachhead Customer

Ultimus: Joe is the HR manager of a bank
with over $100M in assets and 600+
employees. Turnover at the bank for entry
level positions is over 20% and the employee
on-boarding process causes his group a lot of
pain. Joe has been with the bank for over 3
years and is ready to implement automated
processes to reduce his pain.
Segmentation
2
“Ideas must be tested against what people really
want”
 Identify 2-4 Segmentation Schemes for Target Country
 Identify Target Sub-Markets and Prioritize Them by Strength of
Opportunity
 Describe Beachhead Customer in paragraph form
Customer Segmentation